BofA Securities Survey Shows Concern for Future FDIBy Sofía Hanna | Wed, 03/17/2021 - 14:22
In 2020, Mexico captured US$29.075 billion in Foreign Direct Investment (FDI), which was 11.7 percent less than in 2019. The most recent BofA Securities survey showed that 40 percent of participants are concerned about the investment that will come to Mexico due to the Mexican government’s decisions.
A previous MBN article mentioned that the Mexican economy was highly dependent on the US’ well-being, with this being an essential factor in its recovery. However, new concerns are now arising from the current government’s decisions and how they could affect the investments that enter the country, as mentioned by El Economista. Nevertheless, according to the World Investment Report, Mexico’s 11.7 percent fall in FDI was moderate compared to other countries. “This shows that, compared to the rest of the world, Mexico had a better performance in attracting FDI during the most adverse year in recent economic history,” as stated in a Forbes article.
Why Is FDI a Matter of Concern?
According to El Economista, global investors are more concerned about the Mexican government’s decisions than about any other factor that could be relevant at the moment. This is evidenced by the monthly survey conducted by Bank of America Securities among global fund managers with portfolios of approximately US$86 billion. There has been a slight change in reasons for concern because of the expectation of a more dynamic vaccination and improvement in growth prospects. However, there is still 40 percent of participants who believe that Mexico will lose investment grade. In the same survey, the results showed that 84 percent of those surveyed consider that the delay in vaccination could hinder regional recovery, a figure that contrasts with the 70 percent who had this same perception the previous month. The survey also shows that most of respondents expect the scenario to at least remain stable for the next six months, as reported by El Universal.
This is not the first time that decisions from the Mexican government have caused concerns for the future of Mexico’s economy. In a recent MBN article, it was mentioned that there had been many criticisms around López Obrador’s economic recovery strategy and infrastructure projects, from their execution to the cancellation of flagship works. Critics include Valentín Diez Morodo, Chairman of the Board of Directors of Grupo Financiero Citibanamex; Alicia Bárcena, Executive Ministry of the Economic Commission for Latin America and the Caribbean and associations like Moody’s.